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Dec. 20 --The Treasury, Labor, and Health and Human Services
departments are considering amending the regulations on excepted
benefits regarding vision and dental benefits, as well as employee
assistance programs, according to proposed
rules published Dec. 24 in the Federal Register(78 Fed.
Reg. 77,632).

The proposed rules (REG-143172-13; RIN 1210-AB60; CMS-9946-P)
state that excepted benefits are generally exempt from the changes
made to the Employee Retirement Income Security Act, the tax code,
and the Public Health Service Act by the Health Insurance
Portability and Accountability Act and the Affordable Care Act.

Under HIPAA, "vision and dental benefits are excepted if they
are limited in scope," the proposed rules said. Excepted benefits
are divided into four categories and the proposed rules would amend
the category known as limited excepted benefits, the agencies
said.

After the ACA's enactment, the departments received comments
asking for the regulations on excepted benefits to be amended to
remove conditions for limited-scope vision and dental benefits as
excepted benefits, the agencies said.

"In response to these concerns, and to level the playing field
between insured and self-insured coverage, these proposed
regulations would eliminate the requirement under the HIPAA
regulations that participants pay an additional premium or
contribution for limited-scope vision or dental benefits to qualify
as benefits that are not an integral part of a plan (and therefore
as excepted benefits)," the agencies said.

Employee Assistance Programs.

The proposed rules also set out criteria for employee assistance
programs to qualify as excepted benefits beginning in 2015, the
agencies said.

The new guidance follows Notice 2013-54 issued by the agencies
in September, which stated the intent to amend the excepted
benefits rules with regard to EAPs and provided transitional relief
for employers offering EAPs (31 HRR 988, 9/23/13).

Through 2014, EAPs would constitute excepted benefits as long as
they didn't provide "significant benefits in the nature of medical
cost or care," the notice said.

Under the proposed rules, EAPs would qualify as excepted
benefits if the following four conditions are met:

the EAP doesn't provide "significant benefits in the nature of
medical care,"

the benefits can't be coordinated with benefits under another
group health plan,

premiums or contributions to the EAP can't be required and

there is no cost sharing under the EAP.

Limited Wraparound Coverage.

The proposed regulations also would treat as excepted benefits
"certain wraparound coverage" offered to employees who purchased
coverage on the individual market place, because the premiums of
the coverage offered by their employers were considered
unaffordable under the ACA, the agencies said.

"Experts suggest that most workers who are offered minimum value
employer-sponsored coverage will not meet the criteria for the
premiums to be considered to be 'unaffordable' and thus not qualify
for the premium tax credit for enrolling in coverage through an
Exchange. Nevertheless, in some cases, employer plans may be
unaffordable for some employees," the proposed rules said.

Coverage purchased on the exchange may consist of benefits that
aren't as "generous" as the coverage offered by their employer and
the coverage network may not be as broad, the agencies said.

"Some group health plan sponsors have asked whether wraparound
coverage could be provided for employees for whom the employer
premium is unaffordable and who obtain coverage through an
Exchange," the rules said. This would allow employers to provide
coverage to some employees that would be on par with the overall
group health plan coverage they offer if the wraparound coverage
and the coverage purchased on the exchange were taken into account
together, the rules said.

Under the proposed rules, wraparound coverage only would qualify
as excepted benefits if the five conditions are met, the agencies
said. In order to be considered an excepted benefit, the wraparound
coverage must:

"only wrap around certain coverage provided through the
individual market,"

be purposefully designed to give benefits beyond what is
provided through the exchange,

"be otherwise not an integral part of the group health
plan,"

be limited in amount and

not discriminate against anyone based on any one health
factor.

The proposed rules noted "that provision of excepted benefits
will not satisfy an applicable large employer's responsibilities
under section 4980H."

Reliance on Proposed Rules.

The departments said through at least 2014, or until the
regulations are finalized, dental and vision benefits, and EAPs
that meet the conditions set out in the proposed rules, will be
considered excepted benefits.

"To the extent final regulations or other guidance with respect
to vision or dental benefits or EAPs is more restrictive on plans
and issuers than these proposed regulations, the final regulations
or other guidance will not be effective prior to January 1, 2015,"
the agencies said.

Comments are due by Feb. 24, 2014.

By Kristen Ricaurte Knebel

To contact the reporter on this story: Kristen Ricaurte Knebel
in Washington at kknebel@bna.com

To contact the editor responsible for this story: Dana Domone at
ddomone@bna.com

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